Question

Fred Franks is an aspiring entrepreneur. His dream is to open a restaurant that deep-fries everything. Deep-fried Twinkies, deep-fried hotdogs, and deep-fried salads were just some of the dishes he wanted to serve. Always a marketing genius, Fred wanted to call his restaurant TGI Fry-Days. He recognized another company was called TGI Fridays, so he made sure to have a very good (and expensive) lawyer.

Fred had $ 100,000 in his bank account, so in order to start TGI Fry-Days, he needed to borrow money. His bank asked for a full business plan with projected startup costs, pro forma income statement, and pro forma cash flow statement (no pro forma balance sheet needed).

Fred’s Available Sources of Financing

Personal Bank Account: Bank Loan:
Interest on the Loan

Things Fred Would Need.

Kitchen Equipment Furniture & Fixtures Signage
Working Capital

$ 100,000 $ 150,000

$1,500 per month

Cost

$ 150,000 $ 80,000 $ 10,000 $ 10,000

Useful Life

20 years 20 years 10 years

Revenue Forecast
M1: $30,000
M2 & M3: $40,000 per month
M4 – M6: $55,000 per month
M7: $20,000 (taking a summer vacation with his family) M8 – M12: $60,000 per month

Variable Expenses:
Wages: 25% of Revenues
Cost of Goods Sold (food): 33% of Revenues
Marketing: $2000 a month, except November & December (Holiday Season): $4,000 a month No Taxes. Consider TGI-Frydays to be an LLC

Other Expenses (alphabetical order)
G&A $ 5,000 a month
Insurance $ 500 a month
Legal Fees $ 2,000 a month, but paid as $6,000 every 3 months (starting M1) Rent $ 6,000 a month

ONLY***Need help with the Cash flow .

Answer 1

Cash Flow Statement
Particulars	M1	M2	M3	M4	M5	M6	M7	M8	M9	M10	M11	M12
Operating Activity
Revenue	30000	40000	40000	55000	55000	55000	20000	60000	60000	60000	60000	60000
Total Inflow of cash	30000	40000	40000	55000	55000	55000	20000	60000	60000	60000	60000	60000
Wages @ 25%	7500	10000	10000	13750	13750	13750	5000	15000	15000	15000	15000	15000
Cost of Good Sold @ 33%	9900	13200	13200	18150	18150	18150	6600	19800	19800	19800	19800	19800
Marketing	2000	2000	2000	2000	2000	2000	2000	2000	2000	2000	4000	4000
Other Expense
G & A	5000	5000	5000	5000	5000	5000	5000	5000	5000	5000	5000	5000
Insurance	500	500	500	500	500	500	500	500	500	500	500	500
Legal Fees	6000	0	0	6000	0	0	6000	0	0	6000	0	0
Rent	6000	6000	6000	6000	6000	6000	6000	6000	6000	6000	6000	6000
Total outflow of cash	36900	36700	36700	51400	45400	45400	31100	48300	48300	54300	50300	50300
Net cash flow from operating Activity	-6900	3300	3300	3600	9600	9600	-11100	11700	11700	5700	9700	9700
Investing Activity
Purhase of Assets and Invest in W. Capital	-250000	0	0	0	0	0	0	0	0	0	0	0
Net cash flow from Investing Activity	-250000	0	0	0	0	0	0	0	0	0	0	0
Financing Activity
New Funds	250000	0	0	0	0	0	0	0	0	0	0	0
Interest on loan	-1500	-1500	-1500	-1500	-1500	-1500	-1500	-1500	-1500	-1500	-1500	-1500
Net cash flow from Financing Activity	248500	-1500	-1500	-1500	-1500	-1500	-1500	-1500	-1500	-1500	-1500	-1500
Net cash flow	-8400	1800	1800	2100	8100	8100	-12600	10200	10200	4200	8200	8200
opening cash	0	-8400	-6600	-4800	-2700	5400	13500	900	11100	21300	25500	33700
Closing cash	-8400	-6600	-4800	-2700	5400	13500	900	11100	21300	25500	33700	41900